UPDATE 3-Sprint Q3 revs drop; warns of more subscriber defections

Oct 30 (Reuters) - Sprint Corp posted a decline in
third-quarter revenue on Wednesday, losing more subscribers than
expected following the shutdown of its older network, and warned
that customer defections would remain high in coming quarters.

But investors shrugged off the results because they do not
expect big improvements at the No. 3 U.S. mobile operator until
the second half of 2014 and the company did not change its
financial targets for full-year 2013. Shares rose 1.5 percent.

Sprint, which is 80 percent owned by SoftBank Corp,
is revamping its network after years of customer losses.

Sprint reported net subscriber losses of 360,000 for the
quarter. Six analysts contacted by Reuters expected losses of
roughly 313,000, on average.

Sprint said it suffered from service problems in the quarter
due to its work on the network as well as the expected loss of
corporate customers due to the June shutdown of its iDen
network, which was used mostly by business customers.

The iDen shutdown will hurt Sprint's subscriber numbers to a
lesser extend in the fourth quarter, according to Chief
Executive Dan Hesse. But he told analysts on a conference call
that Sprint's customer defection rate, known as churn, would
continue to be at high levels into the middle of 2014, when the
company expects to complete much of its network overhaul.

Sprint, whose churn rate was 1.99 percent in the third
quarter, is working on raising data speeds and adding capacity
from spectrum previously used by the iDen network and from
spectrum from Clearwire Corp, which it bought out in July.

Sprint did not give any timetable for when it could return
to net customer growth.

Roe Equity Research analyst Kevin Roe said Sprint's results
were mostly in line with his low expectations.

"This is a very challenging transition period for Sprint and
so the focus is on 2014," Roe said.

Investors hope Sprint will compete better after the network
upgrade and with financial backing from Japan's SoftBank, which
bought a controlling stake in Sprint for $21.6 billion in July.
SoftBank founder Masayoshi Son has been praised by analysts and
investors for quickly turning around his company's Japanese
mobile operations.

One hope is that Sprint will eventually massively boost its
network and offer customers far more capacity than its bigger
rivals at a cheaper price because of its Clearwire deal, which
brought vast amounts of wireless airwaves.

Analysts have been especially anxious for Sprint to reveal
its plans due to concerns it could spend a lot more than
expected on integrating the spectrum.

Sprint said on Wednesday it expects to integrate the
Clearwire spectrum into its network in markets with a population
of 100 million people by the end of 2014.

CEO Hesse said the company, which is well behind bigger
rivals in upgrading its network, was on track to install
higher-speed Long Term Evolution technology in markets with 200
million people by the end of 2013.

Hesse also promised to give investors details of
"groundbreaking" advances in network and handset technology at
an event later on Wednesday at a company research laboratory
near San Francisco.

Sprint reported a third-quarter profit of $383 million,
compared with a loss of $767 million in the year-ago period,
before its SoftBank and Clearwire deals.

The company said the latest quarter was helped by a
one-time, non-cash, $1.4 billion gain, net of taxes, related to
its previously held investment in Clearwire. It did not report
earnings per share because of the SoftBank deal.

Revenue fell to $8.68 billion from $8.76 billion.

Sprint still expects 2013 adjusted earnings before interest,
taxes, depreciation and amortization of between $5.1 billion and
$5.3 billion, including the dilutive effects of the SoftBank and
Clearwire transactions. It also stuck by its target of 2013
capital expenditures of about $8 billion.

Sprint shares were up 10 cents, or 1.5 percent, at $6.78 in
late-morning trade on the New York Stock Exchange.